Thanks to the blockchain, transactions can be traced, and especially when users convert cryptocurrency to cash, law enforcement and intelligence agencies have extra opportunities to tie the transaction to an individual’s identity.
As with all things involving encryption, furthermore, sometimes law enforcement officials don’t need to crack the crypto, or unmask bitcoin users, to find and seize funds or break cases.
CEO Joseph Blount’s decision to pay criminals the equivalent of $4.4 million, meanwhile, landed him in the congressional hot seat, as he was called to testify this week before multiple committees.
“By reviewing the bitcoin public ledger, law enforcement was able to track multiple transfers of bitcoin and identify that approximately 63.7 bitcoins, representing the proceeds of the victim’s ransom payment, had been transferred to a specific address, for which the FBI has the ‘private key,'” Deputy U.S.
The FBI didn’t immediately respond to a request for comment about Clegg’s insight.
The FBI has rightly been trumpeting the recovery and its implications for individuals with a penchant for cybercrime.
The bureau followed the flow of funds until they ended up in a wallet for which the private key “is in the possession of the FBI of the Northern District of California,” according to the special agent.
In January, as part of the FBI’s disruption of the NetWalker ransomware-as-a-service operation, the government successfully seized about $454,530 worth of cryptocurrency that the operation had received via ransom payments, the Justice Department said in a news release, although it provided no details on exactly how this was done.
In 2013, the FBI arrested Ross Ulbricht, aka “Dread Pirate Roberts,” with an agent tackling Ulbricht while he worked at the Glen Park Branch Library in San Francisco so he would not be able to shut down his computer.
Aside from copious amounts of evidence, that maneuver also enabled the FBI to seize 174,000 bitcoins from Ulbricht, worth about $105 million at the time.
Before joining Information Security Media Group in 2014, where he now serves as the executive editor, DataBreachToday and for European news coverage, Schwartz was the information security beat reporter for InformationWeek and a frequent contributor to DarkReading, among other publications.